53% Affordable Housing Buyers Unhappy With Available Options: ANAROCK-FICCI Survey

Mumbai / October 21, 2024: Demand for affordable homes has nosedived since Covid-19, initially because this segment’s target clientele was financially impacted by the pandemic. At least 53% homebuyers are dissatisfied with the currently available options in this vital segment across cities, ANAROCK-FICCI Homebuyer Sentiment Survey – H1 2024 stated.

 Anuj Puri, Chairman – ANAROCK Group, says, “The top three reasons why prospective affordable homebuyers’ disenchantment with the currently available affordable housing supply are bad project location accessibility, questionable construction quality and poor design, and constricted unit sizes. Of the dissatisfied affordable home seekers polled in our survey, a whopping 92% respondents identify project location as the biggest grouse, while 84% state low construction quality and inferior design elements as major deterrents. 68% respondents find the available unit sizes too small to be attractive.”

ANAROCK data highlights the shrinking supply of affordable housing in major cities, dropping from 26% of total launches in 2021 to just 17% by 9M 2024. Prior to the pandemic in 2019, affordable homes made up 40% of new projects.

“Bigger homes continue to dominate buyer preferences despite spiralling prices in the last one year,” says Puri. “Over 51% of the current survey respondents prefer 3BHK units and just 39% will settle for 2BHK options. City-wise analysis indicates that the demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru, where over 50% respondents prefer it over other flat sizes. Conversely, over 40% participants in Kolkata, MMR and Pune name 2BHKs as their preferred option.”

The H1 2024 survey reveals a shift in buyer preferences toward new launches compared to ready-to-move-in homes. This trend is attributed to increasing confidence in larger, listed developers to deliver projects on time.

Rental income has become a primary focus for 57% of residential real estate investors, driven by significant rental rate increases in recent years.

Demand for premium and luxury homes priced above Rs 90 lakh has risen to 45%, surpassing the pre-Covid level of 27%. Meanwhile, interest in affordable housing options continues to decline.

The survey indicates a growing preference for residential plots, especially in Southern cities like Chennai, Bengaluru, and Hyderabad. Many developers have launched and successfully sold plot projects in these areas.

Villas and row houses are also popular choices in Southern cities, while apartments are preferred in MMR, NCR, and Pune.

Real estate remains the most sought-after investment asset, with 59% of respondents choosing it. Many millennials and Gen-X investors plan to use their investment gains to purchase homes in the future.

End-use buyers now make up over 67% of the market, compared to 64% in the previous survey. Key demands among homebuyers include timely project completion, improved construction quality, and well-ventilated homes.